Councils face £10 billion extra costs by 2020, LGA warns

In a comprehensive submission to the Treasury ahead of the November Spending Review, the LGA has warned Chancellor George Osborne to fully consider the effect on services if funding is cut further.

Council funding has been cut by 40 per cent since 2010 and the LGA fears that the Spending Review will not take into account the added pressures councils are facing.

The LGA’s analysis claims that government policies introduced over the next five years will cost councils £6.3 billion, on top of £3.6 billion ‘business as usual’ costs.

It claims the ‘business as usual’ costs account for pressures to maintain services at their current level due to demand-led and inflation pressures.

The added costs will come from new policies such as: Exempting house builders from Section 106 and Community Infrastructure Levy payments; Reducing rents paid by social housing tenants by one per cent a year, which will cost councils £2.6 billion; Increased National Insurance contributions of £797 million a year following the end of state pension contracted out arrangements in 2016; and Setting aside £1.75 billion to cover the high volume of business rate appeals expected when the 2017 revaluation is introduced.

LGA Chairman Gary Porter said: "November's Spending Review will be critical for the future of our public services over the next decade. Our new analysis shows the significant spending pressures facing councils over the next few years even before the possibility of further funding reductions.

"Leaving councils to pick up the bill for new national policies while being handed further spending reductions cannot be an option.

"Enormous pressure will be heaped on already stretched local services if the government fails to fully assess the impact of these unfunded cost burdens when making its spending decisions for the next five years. Vital services, such as caring for the elderly, protecting children, collecting bins, filling potholes and maintaining our parks and green spaces, will simply struggle to continue at current levels.”

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